Gilead Sciences thought it had prevailed in a whistleblower lawsuit alleging it circumvented FDA rules to use a China-made active ingredient in three top HIV meds, rather than a higher-priced version from South Korea that the agency had approved.

But now the California-based drugmaker has to think again. An appeals court revived that lawsuit, remanding it back to District Court.

In a new opinion (PDF), the U.S. Court of Appeals for the Ninth Circuit revived the False Claims Act lawsuit against Gilead brought on behalf of the government by ex-employees Jeff and Sherilyn Campie. The Campies allege Gilead hid the fact that it contracted with a Chinese manufacturer to make the active ingredient in HIV meds Emtriva, Truvada and Atripla.

"We are disappointed with today’s ruling and intend to challenge this outcome and vigorously defend against these allegations," a Gilead spokesperson told FiercePharma.

For 16 months starting in December 2007, Gilead allegedly brought China-made emtricitabine into the U.S. for use in those three drugs, claiming the ingredient came from an approved South Korean manufacturer. The company did so to save money and trigger “price reduction clauses” with other manufacturing partners, the ex-employees contend.

Senior director of global quality assurance at Gilead from July 2006 to July 2009, Jeff Campie says he was terminated because he fought the company’s actions. U.S. law requires all drug manufacturing partners to be FDA-approved.

To get the ingredients into the U.S., the lawsuit claims, Gilead had labels "obscured or augmented" to conceal where the products were manufactured. Through government-funded programs such as Medicare and Medicaid, the U.S. government spent $5 billion on Emtriva, Truvada and Atripla during 2008 and 2009 alone, according to the lawsuit.

Some of the unapproved emtricitabine from China also didn’t pass Gilead’s internal quality tests, and the company hid those results from the FDA, the Campies contend. When Gilead eventually asked the FDA to approve its new manufacturer, the drugmaker excluded data from failed batches, the lawsuit alleges; for example, one batch allegedly contained “residual solvent levels in excess of established limits,” while a second tested positive for “microbial contamination” in addition to arsenic, chromium and nickel contaminants.

Twice in 2015, the District Court dismissed the suit for failure to state a claim. On Friday, the appeals panel reversed that decision and remanded the case back to District Court.

The panel’s decision comes at a challenging time for Gilead as its hep C business has taken a dive after recent high-flying years. Competitive pressures have hurt Gilead’s pricing power in the once-booming market, and now the drugmaker is eying M&A in other therapeutic areas to lift its fortunes. It has high hopes for its HIV business, however, as it ushers a new generation of therapies to market.

Editor's note: This story was updated with a statement from Gilead Sciences.